Deutsche Bank’s DWS Fined $25M to Settle SEC Probes

In two separate enforcement actions, the Securities and Exchange Commission (SEC) charged Deutsche Bank’s asset management arm, DWS Investment Management Americas, $19 million and $6 million, respectively, for making misleading statements about its environmental, social, and governance (ESG) reporting, and for failing to set up a mutual fund anti-money laundering (AML) program.

Regarding the ESG enforcement action, the SEC said that despite marketing itself as an ESG leader, from August 2018 until late 2021 DWS failed to implement certain provisions of its global ESG integration policy “as it had led clients and investors to believe it would.” Those products include active mutual funds and Separately Managed Accounts.

“Here, DWS advertised that ESG was in its “DNA,” but, as the SEC’s order finds, its investment professionals failed to follow the ESG investment processes that it marketed,” said Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement and head of its Climate and ESG Task Force.

Allegations of DWS ‘greenwashing’ were made years ago. The SEC began investigating DWS’s assertions concerning its sustainable investing requirements in August 2021. The company disputed at the time that it inflated ESG assets. German officials raided Deutsche Bank and DWS headquarters in May 2022 as part of their investigation into the incident.

In the AML action, the SEC found that DWS did not have systems in place that were “reasonably designed” to flag potential money laundering, the agency said.

“The SEC’s order finds that DWS advised mutual funds with billions of dollars in assets yet failed to ensure that the funds had an AML program tailored to their specific risks, as required by law,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

DWS did not admit or deny the SEC’s findings.